China's Economic Statecraft: Co-optation, Cooperation And Coercion

Co-optation, Cooperation, and Coercion

Mingjiang Li

• Publisher: WSPC
• Year: 2017
• ISBN:
  9789814713481
• Topic: Biological Sciences
• Subtopic: Science General
• Index: Biological Sciences

-->

This book aims to study China's economic statecraft in the contemporary era in a comprehensive manner. It attempts to explore China's approaches to using its economic, trade, investment, and financial power for the pursuit of its political, security, and strategic interests at the regional and global levels. The volume addresses three major issue areas in particular. The first issue pertains to how Beijing has used its economic clout to protect what it perceives as its "core interests" in its external relations. Three cases are included: the Taiwan issue, human rights, and territorial dispute in the South China Sea. The second major area of inquiry focuses on how China has employed its economic power in its key bilateral relations, including relations with Japan, North Korea, the United States, and other states in the East Asian region. The third issue concerns China's economic statecraft in the global context. It addresses the impacts of China's economic power and policy on the transformation of the global financial structure, developments in Africa, the international intellectual property rights regime, and China's food security relations with the outside world.

-->

Part One

China’s Use of Economic Power
for Core Interests

Chapter 1

The Politics of Mainland China’s Economic Statecraft in Relation to Current Cross-Strait Relations*

Kwei-Bo Huang

Mainly owing to the rapid growth of economic, political, and military power of mainland China (the People’s Republic of China, PRC) and the intensified internal political struggles leading to a more divided society in Taiwan (the Republic of China, ROC), relations across the Taiwan Strait have been further complicated in the past decade. It seems that mainland China has felt more certain about its advantage in Cross-Strait relations, and that Taiwan has become more doubtful about its political and economic space for survival.

For mainland China, its economic, political, and military leverages constitute a strong basis against Taiwan independence. Owing to the decreased emphasis on the application of military capabilities and the gradual reduction in tension in the Taiwan Strait, mainland China has been exercising more economic and political means to woo Taiwan in various ways after May 2008. Such means do not always have to be treated separately in the analysis of Cross-Strait relations. Sometimes mainland China’s economic policy toward Taiwan can lead to certain political implications or consequences that shape the political nature of Cross-Strait relations. One of the more obvious cases is mainland China’s reception of Taiwan’s investment and professionals, mostly in the fields of high-tech and management, under the Economic Cooperation Framework Agreement (ECFA) signed in June 2010 by the Taipei-based Straits Exchange Foundation (SEF) and the Beijing-based Association for Relations Across the Taiwan Straits (ARATS). Both agencies have been authorized by the respective governments to deal with Cross-Strait matters in various dimensions such as economy, culture, technology, and so on. The ECFA’s economic and political implications have been the focus of many academic works.¹

For Taiwan, it has been in an inferior position regardless of the economic, political, or military affairs in relation to mainland China. Despite the fact that Taiwan has performed well on the world economic stage,² Taiwan still needs a boost to reinforce its economic power as one of the key pillars for Taiwan’s survival and development. Another key pillar is Taiwan’s vibrant democracy which has created the pluralist nature in politics and helped Taiwan to be accepted by most of the democracies in the world. Yet the economic and political achievements of Taiwan cannot prevent it from being isolated from the international community. Moreover, Taiwan’s and mainland China’s respective economic strengths may bring about diplomatic competition between the two governments.

Again, during the presidency of Ma Ying-jeou [

], Cross-Strait relations changed dramatically, basically from confrontation to rapprochement and accommodation. Ma argued that the development of Taiwan–mainland China relations should follow the principles of ‘economics first, politics later’ and of ‘easy decisions first, tough calls later’. To respond, mainland China gradually adjusted its attitudes and policies to a relatively softer approach to Taiwan through economic and social exchanges; nevertheless, it has never given up its pursuit of national reunification by attempting to establish an irreversible framework to better control Cross-Strait relations. Regardless of the unpredictable political dynamics between Taipei and Beijing, Cross-Strait economic affairs have been the most tangible indicator of the peaceful development of Cross-Strait relations. Such functional interactions also helped establish concrete institutionalization in Cross-Strait relations, which would foster sustainable peace, stability, and prosperity between Taiwan and mainland China.

The vital meeting between the head of Taiwan’s Mainland Affairs Council (MAC) Wang Yu-chi [

] and the head of mainland China’s Taiwan Affairs Office (TAO) Zhang Zhijun [

] in mainland China (Nanjing) on 11 February 2014 denoted the beginning of official political engagement between the two sides of the Taiwan Strait after more than six decades. The so-called ‘Wang–Zhang Meeting’ has extraordinary significance in Cross-Strait relations. It not only resulted in agreement to establish bilateral communication channels between the MAC and the TAO, but also symbolized the strengthening of mutual trust as the two ministerial-level officials in charge of Cross-Strait affairs met officially for the very first time.

At those meetings of the heads of Cross-Strait affairs, a couple of functional and institutional (or ‘quasi-political’) issues were touched upon. Examples include Taiwan as a transit stop for mainland travelers, the trade-in-goods agreement, and Taiwan’s participation in regional economic cooperation mechanisms in the Asia Pacific. These will be further discussed later in this chapter.

Following this model, the top leader of the two sides of the Taiwan Strait finally met in Singapore on 7 November 2015, a meeting commonly called as ‘Ma–Xi Meeting’ between Ma and Xi Jinping [

]. The fact that the two top leaders were willing to meet on an equal footing and shelve political disagreement over the issues of political status (e.g., no reference to sovereignty and jurisdiction in public meetings and remarks) and title (e.g., calling each other ‘Mr.’ instead of official titles) — has demonstrated the goodwill and flexibility of both governments to create a precedent if the future top leader of Taiwan does not deviate from the political arrangement or foundation shaped intermittently since the early 1990s, including the 1992 Consensus sometimes described as ‘One China, respective interpretations’ by Taiwan. Taiwan insists on the ROC, whereas mainland China stands firm on the PRC. Arguably, from these meetings, mainland China wanted a steady political framework and resilient economic cooperation and social exchange mechanisms that can keep Taiwan from drifting away. Ma’s leadership wished that from these meetings, Taiwan could ensure a stable process of institutionalizing Cross-Strait relations that could result in equality, dignity, and greater mutual trust across the Strait.

In the past, mainland China used many rhetoric attacks and threats of use of force against Taiwan at critical junctures of Taiwan’s political development, in the hope that it could influence the results of Taiwan’s major elections and deter the rising wave of Taiwan’s independence. Knowing the long-lasting political divergence that has been intertwined with complex domestic politics of Taiwan, political leaders of mainland China have appeared to adjust their strategy toward Taiwan in the context of internal-external linkages. History shows that such a strategy has worked on the external front but not on the internal front. Internally, they have seemed to mix economic and political means to strengthen the ‘united-front’ work on Taiwan. Still, Taiwan underwent two regime changes: in 2000, the Democratic Progressive Party (DPP) won the presidential election; in 2008, the Kuomintang (KMT) regained power in the central government. Now the DPP is the ruling party again, under the leadership of Tsai Ing-wen [

] unwilling to recognize the 1992 Consensus or the ‘One China, respective interpretations’ understanding created by the Lee Teng-hui [

] government and followed by the Ma government. Mainland China has obviously not succeeded in preventing the majority of the people of Taiwan from voting for a pro-independence political party. Externally, they have been able to make good use of mainland China’s economic and political influences to oppress Taiwan’s international space, denounce the ROC’s sovereign status, and illegitimize attempts aimed at claiming an ‘ROC sovereignty’ or creating a ‘Taiwan sovereignty’.

The following sections will begin with an introduction to the strategic thinking and goals of mainland China on the so-called ‘Taiwan issue’. Strategic objectives of mainland China in Cross-Strait economic interactions will be explained by analyzing major contacts between the two sides of the Taiwan Strait. Then, Taiwan’s dynamic domestic politics will be briefly explained as a main obstacle to mainland China’s economic strategy and policy toward Taiwan. Finally, an examination of the economic exchanges between the two sides, mostly between May 2008 and early 2016 will produce some tangible findings to inform future observations on the political factors influencing mainland China’s economic policies toward Taiwan.

Strategic Objectives and Thinking

Beyond a doubt, the strategic objectives of mainland China toward the ‘Taiwan issue’ have remained the same since the separation of the two sides of the Taiwan Strait (i.e., achieving national reunification and enhancing national security).

Mainland China, like the rest of the countries in the world, pursues its goals of national security and interests in the face of internal and external constraints. From Mao Zedong [

] to Xi Jinping, mainland China has vowed to unify Taiwan under the principle of ‘One China’. It sees Taiwan as an inseparable part of ‘China’ and allows no foreign intervention in national reunification. In dealing with Cross-Strait relations, mainland China has always wished to compel Taiwan to engage in bilateral political negotiations and accept political and legal terms in favor of Beijing; respond to irredentism and patriotism that can mobilize its own people to support the Communist Party of China (CPC) government; catch up with or counter the US hegemony; and deter the possible rearmament of Japan in the West Pacific. In other words, reunification (i.e., territorial integrity) and national security have been perceived and portrayed by the mainland Chinese authorities as the most critical strategic goals in its relations with Taiwan.

Mainland China had often used the ‘One China’ principle in its interpretation of Cross-Strait relations. Although Taiwan, under the leadership of Lee Teng-hui [

], would like to refer to the political foundation of Cross-Strait engagements as the ‘One China, respective interpretations’ understanding acquired jointly by both Taipei and Beijing in 1992, mainland Chinese leaders and senior officials still refuse to accept Taiwan’s position and claim the ‘One China’ part only. For instance, in January 1998, the ARATS’s top negotiation official of mainland China Tang Shubei [

], responded to the SEF’s request for the resumption of talks on the basis of ‘One China, respective interpretations’ by arguing that it was unrealistic to contend ‘One China, respective interpretations’ because the consensus reached by the ARATS and the SEF in 1992 was that, in Cross-Strait consultations, both parties simply needed to recognize that the stance of both sides of the Strait was ‘One China’ and that they did not have to discuss the political notion of ‘One China’.³

Yet it seems that Beijing’s harsh tone could be moderated by showing some willingness to negotiate with Taipei as long as the latter could embrace a less rigid definition of ‘China’.⁴ For example, after the term 199...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Contents
• About the Editor
• List of Contributors
• Introduction
• Part One: China’s Use of Economic Power for Core Interests
• Part Two: China’s Economic Influence in Its Neighborhood
• Part Three: China’s Economic Statecraft in Key Bilateral Relations
• Part Four: China’s Economic Statecraft in the Global Context
• Index